Asia ABS prices up on firm feedstock SM, BD costs, strong demand

10 July 2012 08:01[Source: ICIS news]

SINGAPORE (ICIS)--Asian acrylonitrile-butadiene-styrene (ABS) prices rose further this week as some suppliers hiked their offers because of firm feedstock prices and stronger demand for ABS, producers and traders said on Tuesday.

ABS prices bottomed out after falling to below $1,800/tonne CFR NE Asia in late May and started rising in early June, according to ICIS data.

“We have to hike ABS offers in tandem with the fast-rising feedstock costs,” said a producer in Taiwan.

The demand for ABS has also picked up as the peak third-quarter manufacturing season in China for end-products such as toys and consumer electronics has kicked off.

However, with the slow economic conditions in the US and China as well as the eurozone debt crisis, a number of ABS suppliers said they expect the overall demand for the resin to be weaker than last year, despite the current pick-up.

The average ABS plant operating rate in China increased to 75% capacity in July, up from around 65% capacity in June. Producers are building up their inventories as end-users are replenishing their stocks.

“Buyers are stepping into the market to replenish inventories as slow buying activities over the past months have resulted in low stocks,” said a trader in Hong Kong.

The rapid price increase over the past two weeks has also caught some buyers by surprise, prompting them to quickly purchase resins from the spot market.

“Buyers now feel that prices have bottomed out, hence this has caused more buyers to emerge from the sidelines in fear of a further escalation of prices,” said another trader in Hong Kong.

Despite the recent gains in prices, several sellers cautioned that prices could still be volatile as energy futures continue to fluctuate amid the political tensions in the Middle East.

“ABS prices will be affected if energy futures suddenly tumble again, hence it is too early to say if this uptrend is sustainable,” said a producer in southeast Asia.

ABS is used in the manufacturing of toys, consumer electronics, office equipment as well as in the automotive and construction sectors.